Insurer Aviva says capital return and costs targets on track

Insurer Aviva is on track to return at least £4 billion (€4.7 billion) to shareholders and meet cost saving targets, it said on Thursday, as activist investor Cevian pushes for higher returns.

The commitments came as Aviva gave an update on third-quarter trading, pointing to record inflows in savings and retirement and a “sharp” increase in bulk annuity volumes in the quarter.

Cevian took a 5 per cent stake in Aviva this year and wants the insurer to return £5 billion in capital to shareholders by the end of 2022 after a recent spate of international disposals.

Aviva said in August that it would return £4 billion to shareholders, which Cevian said was insufficient.

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"There are some different views out there from certain shareholders," said Aviva finance chief Jason Windsor, adding that the stakeholders remain "very constructive" in their interactions.

Aviva on Thursday said it had completed £450 million of a £750 million share buyback. The remainder of the capital return – at least £3.25 billion – is likely to take place in the second quarter of next year, Mr Windsor said.

Aviva also said it was on course to achieve a savings target of £300 million in 2022, relative to a 2018 baseline.

Cevian has said it believes there to be scope for further cost-cutting by the insurer, totalling at least £500 million by 2023.

Net flows into Aviva’s savings and retirement business rose 21 per cent to record levels in the first nine months of the year while general insurance premiums rose 5 per cent, it said in a statement. – Reuters